The euro rose today during the early Forex trading session, as the European politicians changed their mind on the ECB interest rate policy and traders became more confident that Jean-Claude Trichet wont reduce the rates this week.
The ECB used its every recent statement to convince the market participants that the inflation is a banks primary concern and that it wont go for lower rates to sustain the economical growth. Meanwhile European government officials insisted on lower rates and a weaker euro to ease the pressure on the exporters.
Now the politicians from France, Belgium and Luxembourg, who previously insisted on weaker euro, agree that the current inflation rate is dangerous and that ECB shouldnt lower the interest rates in this situation.
The European Central Bank refuses to follow Federal Reserve and Bank of England decisions to cut interest rates on the background of the global financial turmoil. Hawkish stance on rates allows euro to further appreciate against the other currencies.
Today EUR/USD rate increased 1.5429 to 1.5494 as of 8:29 GMT the first daily growth after two days of dollar rally. EUR/JPY followed the trend and went up from 162.44 to 163.01 as the carry trade positions strengthened and the yen fell.
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